RSS 2018: Revenue Strategy Begins With Strong Leadership

Industry Leaders and Disruptors Gather to Learn Latest in Innovation and Technology

 "New Players, New Models" panel session during RSS 2018.

"New Players, New Models" panel session during RSS 2018.

Washington – The sixth annual Revenue Strategy Summit brought together technology innovators and hospitality industry leaders, including brand executives and asset managers, to examine the challenges hotels face in maintaining rate growth and managing a distribution landscape that gets more complicated by the day.

The one-day conference, held at the Knight Conference Center at the Newseum in Washington, D.C., combined hotelier-led panel discussions with keynote presentations on voice-activated digital assistants like Amazon's Alexa, blockchain's potential to improve hotel loyalty, and Wall Street investors' sentiment toward the travel industry.

In both networking opportunities and educational sessions, startup disruptors like KoddiKoridor and Skylark shared the stage with leaders from hotel companies like Marriott International, Starwood Capital Group and Red Roof Inn.

"It's gratifying to see RSS continue to grow in its sixth year," said Patrick Bosworth, Co-Founder and CEO of Duetto, which co-hosts RSS with Kalibri Labs LLC and Silver Hospitality Group. "The hoteliers who joined us for RSS recognized that they're competing with online travel agencies and newer digital disruptors to create more value for travelers. The companies that can achieve this earlier in an evolving customer journey will see continued success."

Cindy Estis Green, Co-Founder and CEO of Kalibri Labs, added: "Revenue Strategy is not just the way of the future for hotels — it's needed in the present, as the digital marketplace that has come to dominate hotel bookings only gets more complex. There are few events like RSS focused on the needs of revenue strategists, who must keep abreast of emerging technologies while remaining proficient in the blocking and tackling needed to target and deliver profit contribution and improve asset values."

A prevailing theme several hoteliers brought up during their presentations was the need for what one panelist called "revenue leadership," added Stacy Silver, President of Silver Hospitality Group.

"The important point our colleagues heard over and over this year is an effective revenue strategy has to start with investments in our people," Silver said. "To that end, we will always strive to make RSS the conference where current and future leaders can learn from each other and guide our industry through whatever challenges or opportunities come next."

Read the full article on Hospitality Net

2018 Revenue Strategy Summit Offers a Day of Deep Dives Into Hospitality Finance

RSS-2018-.jpg

On July 10, approximately 300 revenue managers, owners, operators, and other hotel professionals met at the Newseum in Washington, D.C. for the sixth annual Revenue Strategy Summit. Co-hosted by Duetto, Kalibri Labs, and Silver Hospitality Group, the one-day conference offered attendees a deep dive into revenue management and strategies, pulling in experts from all areas of the industry to discuss everything from new technologies disrupting the hospitality revenue space to the overall financial health of the lodging industry.

Patrick Bosworth, CEO and co-founder of Duetto, said that the conference was created to put a spotlight on revenue strategy and educate the hospitality market as to why it’s so important. He explained that demand is a complicated animal, with many factors influencing its ebbs and flows. “You’re not just receiving this demand. You’re not managing demand that’s coming to you and then designing marketing programs in a vacuum and then having your sales people out there trying to bring in group business or leisure-contracted business or corporate-contracted business. There needs to be an underlying strategy that underpins all of these different functions to be able to drive the most profitable business for hotels,” he described.

The event’s seven panels were augmented with plenty of opportunities for attendees to network with the speakers and one another, allowing them to make new connections that could improve their business and clarify details that may have piqued their interest, such as…

A Wider Distribution Landscape

One of the hot topics at this year’s Summit was the new distribution landscape, which includes many more avenues for potential guests to book than ever before. “The occupancy levels that we currently run as an industry are unprecedented,” noted Brian Berry, senior vice president of sales and data analytics for Cvent, a company that provides software for event management, web surveys, and email marketing, during a panel called “Reordering the Hospitality Universe.” “Never in any cycle have we ever achieved the kind of occupancy levels we’re achieving today. Some of it is the revenue management systems and the revenue management capabilities—we have to better manage our group patterns and our blocks—but a lot of it is the distribution landscape. We can simply provide our inventory to a broader set of customers then we’ve ever been able to reach, and that allows hotels to run 80 percent plus on an annual basis. It’s incredible, and it would have been unheard of 10 years ago,” he added.

“Data Is the New Oil”

Data was another common thread at the Revenue Strategy Summit. Many speakers came back to the phrase, “Data is the new oil.” It’s the most valuable resource that hoteliers have at their disposal to create the type of guest experience that drives occupancy and profits, and it’s the key to unlocking a property’s revenue potential. However, hoteliers need to invest in technology to glean useful information from data and make it actionable.

Jos Schaap, CEO of and co-founder of StayNTouch, a company that creates mobile hotel PMS systems, said, “Data speeds up personalization. In order to achieve good personalization, it’s important that there is a lot of data and that there is speed with which that data can be accessed. So you need to have fast computers, and more accessible devices. Computers need to compute lots of data to [help determine] what a guest wants.”

Slower Growth for OTAs

Several panelists also noted that OTAs may be approaching the end of a booming growth period, as they’ve reached a certain level of market penetration. “We’ve seen that the glory days have come and gone for the OTA space,” said Lloyd Walmsley, a research analyst for Deutsche Bank. Walmsley added that there’s still a shift from other channels to OTAs, but most of that can be attributed to the huge amounts of money that OTAs spend on marketing. From his vantage point, though, investors are starting to back off from OTAs because they’ve reached a point of maturation. “It’s a tough space to get data on, in terms of the overall penetration, but when you really strip out group and corporate, the leisure penetration, at least in the United States and Western Europe, is hitting 60 plus percent,” he added.

Incorporating Revenue Management Into A Hotel’s Processes

As the revenue management discipline becomes more prevalent in the hotel industry, another area that concerned many of the panelists was how to best incorporate it into a hotel’s existing procedures and processes. Bonnie Amato, chief revenue officer of Fulcrum Hospitality, strongly recommended training revenue management teams to lead during a panel titled “Revenue Strategy In the Digital Age: It Really Works.” “Make sure you’re training leadership skills in your revenue [team]. In my exposure with the people I’ve worked with, I’ve had people who can think the right way, but they haven’t been able to communicate and lead through the group through the numbers,” she said, adding that giving people who understand revenue management the skills to communicate their knowledge has been extremely effective, in her experience. “I was underestimating their skillset. It was phenomenal to see.”

In the same panel, Andrew Jordan, chief marketing officer of Interstate Hotels & Resorts, noted that revenue management shouldn’t only be left to revenue managers. “Invest in the right people, but break down the silos. At the end of the day, I don’t think it’s a department. I think the GMs are the ones who have to get on board and take some ownership of [revenue strategy],” he said.

Disruption is the Future

As a relatively new discipline in hospitality that relies heavily on technology, revenue management is prime for disruption, a fact that was brought up over and over again throughout the Summit. New technologies, like voice technology, artificial intelligence, and machine learning as well as blockchain, were explored in depth in different panels, but the positive feelings surrounding disruption were perhaps best summarized by Alexander Pyhan, vice president of distribution, OTA, meta, and wholesale at Marriott International. “At the end of the day, a disruptor is really an innovator,” he said.

Read the full article on Lodging Magazine

Revenue Strategy Summit explores the opportunities behind disruption

 Patrick Bosworth, co-founder and CEO of revenue management software developer Duetto, addresses the Revenue Strategy Summit in Washington, D.C.

Patrick Bosworth, co-founder and CEO of revenue management software developer Duetto, addresses the Revenue Strategy Summit in Washington, D.C.

Everyone wants to be a disruptor, and with technology giants Amazon, Google and Alibaba moving into the hotel business there is no better time to learn from the industry’s biggest risk takers. That’s why Patrick Bosworth, co-founder and CEO of revenue management software developer Duetto, said the Revenue Strategy Summit was founded in the first place.

The event, now in its sixth year, took place on July 10 in Washington, D.C., with the goal of educating hoteliers on revenue-management strategy and how to remain successful in a world dominated by rapid disruption. Even though hotel companies have been outmaneuvered in recent years by nimble digital entities such as online travel agencies and home-sharing websites, Bosworth said there is still much reason for positivity.

“It’s my belief that hoteliers have been so far behind in their ability to create value in many channels that they have focused on the channels they have been able to control, where they have not seen erosion,” Bosworth said. “As new big entrants come in, they will compete for the same customers that Expedia and Booking.com do. It’s no longer a duopoly, and hotels have been able to leverage data to compete for those customers, as well.”

During a panel discussion, Alexander Pyhan, VP of distribution, OTA, meta and wholesale at Marriott International, said that with so many options for bookings open to consumers there must be a conscious reason behind every purchase, as well as a reason behind a consumer’s choice in brand. This reason can be something as simple as price or as complicated as a long-term relationship with a brand, but in many cases Pyhan said the power of loyalty and loyalty programs remains underappreciated.

“We need to create an ecosystem where the consumer returns,” Pyhan said. “The consumer wants a high-quality product, but they also want a seamless guest experience. That’s how brands need to evolve, not only from a hotel perspective but from a transactional perspective.”

Of course, such a simple premise comes with hundreds of operational and logistical hurdles, one of which is data. Pyhan referred to data as the “new oil,” and hotel companies must work harder than efficient data collectors like Google and Amazon to understand their customers. While it may not be possible to control whether or not a guest ultimately chooses to share his or her data with your company, it may be more pertinent to get a handle on your hotel’s online presence and how guests encounter your business on the internet.

“It’s hard for any brand owner or hotelier to understand where their inventory is being displayed online,” Pyhan said. “It’s frightening to invest billions in brand development, and you don’t know where it’s being displayed!”

Read the full article on Hotel Management

 

HB ON THE SCENE: Finding the Right Revenue Leader

BY NICOLE CARLINO 

WASHINGTON—Having a good revenue strategy is critical in hospitality today, but equally important is having the right person who can lead that strategy. At the Revenue Strategy Summit, held here at The Knight Conference Center in the Newseum, hospitality leaders discussed the changing face of revenue leadership.

 Panelists discussed revenue leaders.

Panelists discussed revenue leaders.

In a session titled “Revenue Strategy in the Digital Age: It Really Works,” moderator Kathleen Cullen, SVP, revenue & distribution, Two Roads Hospitality, noted that revenue strategy has been evolving. “The discipline is moving toward involving planning and resource allocation to their strategic needs. Hotel revenue management has been a very tactical and very reactive discipline in the past, and we work very closely with sales and marketing, and sales and marketing is also not focused on planning and resource allocation. They tend to focus very tactically on the transactional: What can we do to get more eyeballs?” she said. “That means there is not a lot of planning and resource allocation happening within the revenue generation functions at hotels.”

Additionally, she noted, revenue management, sales, marketing and digital are often treated as separate. “We look at them in silos and we allocate resources in silos versus looking at a holistic approach,” she said. “It’s difficult to remove the walls that exist. Much of it is in the mindset. So much of the landscape has changed over the years, but hoteliers have not changed our approach and how we think about things.”

Read the full article in Hotel Business

All About the Guest: How Technology is Transforming the Hotel Experience

 Left to right: Cindy Estis Green of Kalibri Labs; Mark Carrier of B.F. Saul Company Hospitality Group; Barry Goldstein of Wyndham Hotels & Resorts; and Ash Kapur of Starwood Capital Group

Left to right: Cindy Estis Green of Kalibri Labs; Mark Carrier of B.F. Saul Company Hospitality Group; Barry Goldstein of Wyndham Hotels & Resorts; and Ash Kapur of Starwood Capital Group

HOUSTON—Technology is at a crossroads in the hospitality industry. While brands are trying to connect the dots and patch up areas of disconnect, they’re also trying to bring in new, advanced guest experiences. The challenge comes from integrating these innovations into legacy properties, which may have more outdated technology in place, making the shift costly. But one aspect that holds true across all properties is a strategy of consistency in experience, which was discussed at this year’s HITEC Houston.

During the “Technology and the power of the C-Suite” general session, a panel of top-level executives gave possible solutions to this challenge, as well as hopeful insights. While there was some opposition about how exactly to overcome technology’s transformations, all agreed that it could either make or break the guest experience, depending on its functionality—whether or not this technology works properly.

Ash Kapur, SVP of hotel asset management and CRO for Starwood Capital Group, stressed the importance of having a brand vision and a set strategy for long-term goals. “I see a lot of Band-Aids; I see a lot of things broken. What bothers me is that there is not a single approach today in technology,” he said. “The hospitality space is extremely myopic.”

Mark Carrier, president of B.F. Saul Company Hospitality Group, agreed, but recognized that while a disjointed strategy may obstruct a cohesive guest experience among properties, it presents new possibilities. “Rather than an integrated technology approach for brand companies, it ends up patched together. Not being fully integrated creates opportunity for innovative, faster moving companies,” he said.

Others weighed in, noting how guest experience plays into this strategy. Cindy Estis Green, CEO of Kalibri Labs, mentioned that it wasn’t always about guest-facing products. With technology being tactical in the early days, very little emphasis was put on the guest journey, but now, it’s taking center stage. “Now it’s part of the brand definition. You can build technology around exactly what you want the brand to deliver,” she said. “To do technology because it’s cool doesn’t make it. To do technology that actually becomes seamless in the guest experience is the magical part.”

A consistent brand strategy has to encompass functioning technology for a frictionless guest experience. According to Barry Goldstein, EVP and chief commercial officer for Wyndham Hotels & Resorts, hotels have very few chances to get this right. Goldstein said that once a hotel presents guests with a product that simply doesn’t work, the guest no longer wants to interact.

Read the full article in Hotel Business

How Hotel Managers Can Generate Profits Above and Beyond Owner’s Expectations

By Max Starkov

 The hospitality industry is enjoying its longest expansion and healthiest growth in decades, yet, are the owners happy?

The hospitality industry is enjoying its longest expansion and healthiest growth in decades, yet, are the owners happy?

Background:

The economic collapse of nearly ten years ago brought not only havoc to the hospitality industry, but also created a new type of hotel owner: the activist owner. These owners are knowledgeable, curious, involved, and demanding.

There is a lot happening in 2018 that hotel owners should be happy about. After the best Q1 on record earlier this year, it is shaping up to be another stellar year in hospitality with demand (2.4%) outweighing supply (2%); occupancy increasing by 0.4%; ADRs growing by 2.6%; and RevPAR increasing by 3% (STR, PWC).

The hospitality industry is enjoying its longest expansion and healthiest growth in decades, yet, are the owners happy?

For one, in spite of record-breaking industry benchmarks, profitability is falling and net room revenue—i.e., revenue that remains with the hotel after accounting for distribution costs (OTA commissions, traditional agency commissions, and other distribution expenses)—has been declining steadily over the past several years. In 2017 U.S. hotels earned roughly $155.2 billion in guest-paid revenue but paid an estimated $25.2 billion to acquire guests in the form of OTA commissions and other distribution costs, retaining significantly lower net room revenue of $130 billion (Kalibri Labs). Revenue capture—i.e., net room revenue that remained with the hotels—declined from 84.9% in 2015 to an estimated 83.5% in 2018 (Kalibri Labs).

As far as falling profitability is concerned, 2018 is shaping up to be a repetition of 2017. The overall growth in room revenue, occupancy, and RevPAR that many hoteliers have been enjoying in recent years cannot possibly compensate for “the loss of wealth” in the form of steadily increasing distribution costs via the OTA.

So what should hotel management companies (HMC) do to increase profitability for owners and fulfill their fiduciary obligations as responsible managers? Naturally, any good and responsible HMC can do a lot to improve the bottom line for their hotel owners. However, here we will focus only on increased profitability as a result of smarter distribution and digital marketing strategy.

Read the full article on Hotel News Resource

HITEC Panel: Technology investment requires direction, clear goals

HOUSTON — It doesn't pay to invest in technology without a plan. However, a panel of hotel executives at the Hospitality Industry Technology Exhibition & Conference 2018 in Houston accused the industry of failing to look before it leaps into technology upgrades, charging ahead without a precise objective.

 From left: Michael Levie, COO at citizenM Hotels; Cindy Estis-Green, CEO and co-founder of Kalibri Labs; Mark Carrier, president of B.F. Saul Company Hospitality Group; Barry Goldstein, chief commercial officer at Wyndham Hotels & Resorts; and Ash Kapur, SVP of hotel asset management and chief revenue officer at Starwood Capital Group.

From left: Michael Levie, COO at citizenM Hotels; Cindy Estis-Green, CEO and co-founder of Kalibri Labs; Mark Carrier, president of B.F. Saul Company Hospitality Group; Barry Goldstein, chief commercial officer at Wyndham Hotels & Resorts; and Ash Kapur, SVP of hotel asset management and chief revenue officer at Starwood Capital Group.

Ash Kapur, SVP of hotel asset management and chief revenue officer at Starwood Capital Group, said he is concerned by the number of legacy systems propping up the industry. He also is weary of the number of systems in a hotel’s “tech stack” (a combination of software products and programming languages used to create a web or mobile application) that have been temporarily repaired with “Band-Aids,” as he said. Furthermore, Kapur said that as the industry works to fix its growing list of tech limitations, organizations within hospitality continue to attempt to disrupt or reset aspects of the customer journey, creating more problems.

“The hotel space right now is very myopic. I think in some cases we have to press reset and ask what is a brand’s vision, what is the customer journey, and is there technology out there to help connect the dots,” Kapur said. “It’s important to have a vision, a sense of where you want to be three to five years down the line, and I don’t see that happen all the time.”

Cindy Estis-Green, CEO and co-founder of Kalibri Labs, said the hotel industry once was tactical in its approach to technology spend and integration. Today, however, she sees and industry that is hungry to innovate while simultaneously lacking direction.

“Technology was very tactical in the early days,” Estis-Green said. “If you couldn’t justify saving labor, then you couldn’t put new technology in. Accounting, point-of-sale and front-desk check-in took priority. Now we want the tech stack to deliver guest services, and we want technology to be front-and-center, which is a challenge because we have a lot of legacy systems.”

Read the full article on Hotel Management

HITEC: Industry must think holistically about tech

 Cindy Estis Green of Kalibri Labs; Mark Carrier of B.F. Saul Company Hospitality Group; Barry Goldstein of Wyndham Hotels & Resorts; and Ash Kapur of Starwood Capital Group; speak during the Hospitality Industry Technology Exposition & Conference

Cindy Estis Green of Kalibri Labs; Mark Carrier of B.F. Saul Company Hospitality Group; Barry Goldstein of Wyndham Hotels & Resorts; and Ash Kapur of Starwood Capital Group; speak during the Hospitality Industry Technology Exposition & Conference

HOUSTON—Technology is vitally important to the overall success of the hotel industry, but the industry’s general approach to utilizing technology might be holding it back, according to a panel of experts speaking during the Hospitality Industry Technology Exposition & Conference.

During the “Technology and the power of the C-suite” general session, Ash Kapur, SVP of hotel asset management and CRO for Starwood Capital Group, said he’s witnessed a lot of what the industry does wrong with tech over his years of combing through acquisition opportunities.

“When you look at the tech stack, in most instances you see a lot of band-aids,” he said. “There are a lot of things broken, and it’s not just the companies we’re pursuing. You see it across the landscape of hotels.”

He said the industry’s piecemeal approach to technology can often lead to bad guest experiences. He used the example of a front-desk employee having to ask a guest for a cellphone number at check-in to enable an on-property texting system, when the hotel already had the guest’s phone number in either its property management system or customer relationship management software.

“That’s the break,” he said. “Those are issues that need to be addressed.”

Data and privacy
Each of the panelists highlighted the need for systems that intuitively speak to each other and share important data for both guest-facing and behind-the-scenes improvements.

“Capturing that (data) flow and making it seamless is the challenge,” Kalibri Labs CEO Cindy Estis Green said. Achieving that goal will ultimately lead to a better level of recognition for repeat guests and better guest experiences, she added.

But Barry Goldstein, EVP and chief commercial officer for Wyndham Hotels & Resorts, said the need for seamless data sharing across a property’s systems and across brands comes with the very practical challenge of ensuring guest information remains safe and secure.

“The lens that makes this harder is privacy,” he said.

Panelists agreed that ultimately guests will agree to share data with hotel companies if there is an obvious payoff in terms of an improved experience.

“That’s driven by if you give me a good enough reason (to share information),” Kalibri Labs’ Green said.

She noted the hotel industry has had to shift how it views the ultimate purpose of technology. In the past, technology was largely viewed as a money-saving tool, and any new implementation would have to be tied to labor savings to drive return on investment, she said. But today, guest experience should be the driving factor in considering technology investments, she said.

“Now we’re using technology to be front and center as part of the guest experience and brand definition,” she said.

Read the full article on HNN

The OTA battlefield: Legislation to loyalty

By Gary Isenberg

The struggle to persuade guests to book direct instead of through an online travel agency is ongoing, but hoteliers have a number of factors working in their favor.

Hotel brands fight valiantly against the online travel agencies in an attempt to sway consumers to book direct through their proprietary channels.

It’s going to take an industrywide, two-pronged attack, however. On one front, the industry must lobby for legislation to prevent third-party booking sites from misrepresenting themselves as the brand channel.

Fortunately, that’s already happening. The American Hotel & Lodging Association’s ongoing strategic offense targets beltway influencers. Recently, the AHLA successfully campaigned the Federal Trade Commission, which found and charged a third-party reservation center for deceiving consumers into believing they’re booking directly with a hotel. The ruling of the FTC bans the misrepresentation of a hotel’s identity, now requiring clear disclosure of third-party OTA status and a compliance report.

Consumers are speaking up. According to Research & Polling, 88% of consumers desire transparency in hotel booking. Media Day NY & DC has found that 72% of consumers want the government to enforce laws on these third-party affiliates. The AHLA has partnered with several consumer protection advocate groups, such as the Better Business Bureau, to educate consumers on how to avoid misleading and fraudulent sites. The AHLA is applauded for its efforts and results. It is off to a good start.

Simultaneously, several of the major hotel companies have taken the OTAs head on, launching national advertising and media campaigns educating the consumer on the benefits of booking direct with a lowest-price guarantee. Hilton, Marriott, Hyatt and IHG kicked off book-direct efforts in 2016.

In addition to the lowest-price guarantee, the brands have turned to their elite loyalty programs and conceived a slew of exclusive guest perks for their reward members in an effort to sidestep the OTAs and increase their direct bookings. These programs appear to be making headwinds.

Loyalty programs do work
A recent J.D. Power survey suggests loyalty programs do create a bond between a guest and a brand. Nearly half (47%) of the more than 4,600 hotel rewards program members polled said they had booked a hotel room within the past 12 months through the brand.

Last year, a study by Kalibri Labs found between 40% and 60% of reservations in the upper-midscale, upscale and upper-upscale segments came through loyalty programs in 2016. What’s more, brands grew rewards memberships by between 30% and 40%.

These loyalty programs increase direct bookings because the brands now use the one powerful tool they have over the OTAs: delivering a superior guest experience. By delivering first-rate services exclusively to rewards members, brands have the opportunity to pry consumers away from the OTAs.

Although the efforts of the brands and industry as a whole have had some success, the brands still lag behind the OTAs in bookings, according to Hitwise. The online market trend tracker counted reservations made via the OTAs and the brands’ platforms between May 2016 and May 2017 and found the OTAs grabbed 58.3% of the bookings compared to 41.7% reserved through brand channels.

Read the full article on HNN

The OTA’s Attempt at Discrediting the Value of the Hotel’s Direct Channel

By Max Starkov, President & CEO at HEBS Digital

Background:

Earlier this week, the European Technology and Travel Services Association (ETTSA) released a report called "Hotel Distribution Costs," examining the costs associated with direct and indirect distribution channels for hotels, together with the impact of channel shift.

ETTSA is an organization "representing and promoting the interests of global distribution systems (GDSs) and travel distributors (read: OTAs), towards the industry, policy-makers, opinion formers, consumer groups and all other relevant European stakeholders."

The report, prepared by a consultancy called Infrata, concluded that hotels that attempt to boost direct bookings at the expense of agencies and OTAs risk having lower occupancy rates with "no measurable" savings on costs, and suggested the main reason for hoteliers to push direct sales is to "reduce transparency for consumers."

The ETTSA report uses "a magic wand" to convince the naïve or whoever is listening that hoteliers would be much better if they abandon their useless direct distribution efforts and rely on the OTAs for their distribution. The report's highly selective "analysis":

  • Dramatically overstates the effect of the much discredited "OTA Billboard Effect"— remember the unfortunate Cornell University "study," financed by the OTAs? This study, disproved many times over, tried to convince hoteliers that they should use OTAs in order to generate more bookings from the property's own website, due to the so-called "Billboard Effect."
  • Underestimates the complexity of the online travel consumer journey: Today's travel consumer engages in 38,983 digital micro-moments in just under two months, and the average travel consumer journey takes about 17 days, eight research sessions, 18 site visits, and six clicks before making a hotel booking (Google Research).
  • Tends to over-estimate the hotel's direct distribution costs and undervalue OTA distribution costs, which go beyond the OTA commissions, and include costs associated with revenue management, APIs, GDS, CRS and channel management systems, etc. OTA channel management alone occupies an increasing share of the revenue manager's bandwidth, which means rising payroll and benefit expenses.
  • Does not account for the fact that direct booking costs are fixed, while OTA distribution costs are percentage of room revenue and grow with higher ADRs or longer length of stay (LOS).
  • Makes the rather offensive claim that hoteliers' direct booking campaigns are motivated by the hotelier's desire to "decrease customer transparency."

Read the full article on Hospitality Net

Marriott and Hilton’s Group Commission Cuts Put Pressure on Industry

As hotel chains have shifted their business models over the last decade, keeping owners happy has become the priority. Slashing group booking commissions for intermediaries saves owners money, so it’s easy to see how the largest U.S. chains will follow the example of Marriott and Hilton in the near future.
— Andrew Sheivachman

Travel agents and meeting planners are becoming the latest group to feel the pressure from hotel industry consolidation.

A decision by Marriott International, with Starwood Hotels in its fold now, to cut group hotel commissions was soon followed by Hilton Worldwide. Marriott has already reduced commissions on North American group hotel bookings to 7 percent, from 10 percent, demonstrating that hotel chains won’t be afraid to put pressure on travel agents and meeting planners in the future (Hilton’s cut will go into effect later this year). It will also likely mean increased costs for corporations and groups that hold events at hotels as agents and planners pass on costs to them as they grapple with the commission cuts from hotels.

“We want to make sure we have [a policy] that is fair and equitable, and we felt this is the right [move],” Brian King, Marriott International’s global officer of digital, distribution, revenue management, and global sales, told Skift. “There was some rumor going around that commissions would be cut to zero, [but that was never an option]… any time a business model shifts, [agents and planners] need to recalibrate their business, but by the same token we’re also encouraging planners to move to a different, [more transparent] planning model.”

....

RISING COSTS

Although not everyone agrees that it comes down to ownership issues. Hotels used to have meeting planners on staff to deal with the booking and planning of events; this process has become outsourced to a variety of third-party planners, venue sourcing organizations, and now a variety of online booking sites for small group events.

“The value chain swung from one side to the other, and a focus on cost became much more of a spotlight issue,” said Cindy Estis Green, CEO of Kalibri Labs, a hotel benchmarking firm. “Hotels have been paying more for the same business, there’s been a spike in costs for relatively flat group business.  They’re getting the same business and having to pay double or triple for it.”

In Estis Green’s estimation, tension has been building up in the ecosystem for more than five years.

Kalibri Labs recently released a report crunching the numbers on the costs hotel pay for group business. Its analysis found that larger hotels, which generate the most group business revenue, pay the largest cost as a percentage of group revenue for groups and meetings business.

skift g&m.PNG

“Big hotels write the biggest checks,” said Estis Green.

The commission cuts are related to the cost of customer acquisition for a hotel’s group business; an abundance of factors, from planners and agents to city housing fees and overall technology costs, drive up the cost of a booking for hotels, and this has led the brands to cut costs.

Kalibri Labs suggests that the costs paid out to companies involved in group bookings could double for U.S. hotels by 2022.

Read the full article on Skift

At AAHOA, hoteliers learn how expensive it is to acquire customers

NATIONAL HARBOR, Md. — It’s no longer enough for hoteliers to set targets for revenue in 2018. Now they should be setting targets for the cost of making sales. That’s the message Cindy Estis Green, CEO and co-founder of hotel revenue performance analyst Kalibri Labs, delivered tthis week at the Asian American Hotel Owners Association's 2018 annual conference, here at the Gaylord National Resort & Convention Center.

According to Green, hotels earned roughly $155.2 billion in guest-paid revenue in 2017. But in order to make that money, hotels spent an estimated $25.2 billion to acquire guests, retaining a significantly lower $130 billion (a metric Kalibri Labs refers to as “revenue capture”). Vast swaths of these expenses are impossible to avoid, but many are the product of online travel agency fees and other concerns, which, with a little bit of strategizing, can be mitigated.

One way hotels are managing this is by promoting direct bookings. In 2017, Green said hotels pulled in 22.6 of their overall bookings from brand.com, while OTAs brought in only 13 percent. At first blush, this seems like a remarkably positive trend, but hotels’ revenue capture actually decreased from 2015 to 2016. In 2015, hotels’ revenue capture was recorded at 84.3 percent, but it fell to 83.8 percent the following year. These metrics, however, were recorded before the hotel industry began a concerted push to increase direct bookings.

“The book-direct campaigns are big, and have been very effective at increasing brand business,” Green said. “Brand business will always be better for your bottom lines, and the health of the industry.”

Revenue capture is the revenue hotels retain after spending to acquire guests.

Green anticipates revenue capture will decline again in 2018, although there may be hope. Kalibri Labs reported performance in brand.com sites is forecast to improve 5.4 percent in 2018, while voice-based bookings will grow 3.8 percent. However, property-direct bookings are forecast to be down 7.5 percent, while OTAs are expected to increase 8.1 percent and global distribution systems will be up a meager 0.6 percent.

Read the full article on Hotel Management

Hilton Joins Marriott in Slashing Planner Commissions

Second major hotel chain will cut third-party planners' rate to 7 percent from 10

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Hilton Hotels & Resorts today announced that it is following Marriott's lead and cutting the commission it pays to third-party meeting planners who book business at its U.S. and Canadian hotels from 10 percent to 7 percent, effective Oct. 1. Existing business booked before then will not be affected. 

In announcing the commission cut, Hilton senior vice president and commercial director, Americas, Danny Hughes (pictured), said that while his company recognizes, "the important and integral role" third-party planners play in its meetings and events business, "in light of growing group distribution costs and the complexity of intermediary [third-party] services offered, Hilton has revised its base group sales commission rate."

Still, Hilton has provided six months lead time until the new commissions plan comes into place, giving planners and their clients time to adjust to the new structure. Since the Marriott announcement, there has been some discussion in the industry that the commission model might not be the best way for third party planners to price their services.

Hughes adds, "We are respectful of how the changes that are being made impact our partners, and we took that under careful consideration as we planned for this update. What we're really focused on right now is a better way to balance the needs of all parties involved, enabling our owners to invest more in meaningful innovations that will drive more happy guests and more meetings to our hotels."

Hilton's plan is also not mandatory for all properties, Hughes confirmed, noting that the company "is changing its base group sales commission rate, which will be applicable to commissions paid by Hilton and at participating hotels in the U.S and Canada. As with many other Hilton programs, we anticipate a high degree of participation in this program."

"It's a sad day in the industry, round 2," said David Bruce, managing partner of CMP Meeting Services, who reacted to Marriott's move by quickly forming an organization that is in the process of turning into an industry association for small third-party companies and individuals, Meeting Planners Unite. 

"It's a shame Hilton is following suit with Marriott and not looking out for relationships Hilton has had with the third-party market for quite some time," he added. "You do business with the people you trust. Here is another example of a chain forgetting who buttered their bread for so many years."

Hughes says Hilton's move is necessary in order to "balance the needs of all parties," adding that the reason for the cut is easing the costs that hotel owners pay for group business. That, "will allow our owners, over time, to make further investment in products and offerings that enhance the guest experience."

He points to a new report by research firm Kalibri Labs that found the cost of group business acquisition has risen dramatically in the past five years, to more than $4 billion, and is expected to reach $8 billion to $10 billion in the next five years. "The total costs can reach upwards of 35 percent of room revenue per group when all costs are considered," Kalibri said in its report. 

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Hilton Follows Marriott's Lead on Commission Cuts

 Danny Hughes, Hilton's senior vice president and commercial director for the Americas

Danny Hughes, Hilton's senior vice president and commercial director for the Americas

Two months following Marriott International's announcement that it would reduce group-intermediary commission rates to 7 percentHilton has announced it will do the same. Hilton is providing third parties with more notice than its competitor, however. Group business booked by intermediaries at participating hotels in the U.S. or Canada on or after Oct. 1, 2018, will be subject to Hilton's new base commission rate of 7 percent. Business booked before then will be honored at the commission rate previously contracted.

That Hilton refers in its statement to "participating hotels" indicates the change isn't mandatory for all properties. "We're changing our guidelines on the commission rate," explained Danny Hughes, Hilton's senior vice president and commercial director for the Americas. "But I can tell you that, like so many programs we have, we anticipate a huge amount of participation in this. It's a discussion point we've been having with owners for a long, long time now. I'm confident it will be very high participation."

The decision is a result of growing group-distribution costs and the complexity of intermediary services offered, according to Hughes. "This is truly something that is good for everybody," Hughes continued. "Whilst the move might be initially met with some frustration, the one thing we all share - whether it be the hotel, whether it be us as the brand, whether it be the third-party meeting planners - the one thing we are all totally aligned on is that we thrive when great meetings happen in our hotels. And that's what this is going to help facilitate. It's going to allow owners to actually make investments in both the physical product and in new innovations that are coming along, and of course, great, great service - and hopefully that's going to mean more and more meetings, which is good for everybody. That's really the crux of why we're doing this."

When asked about exemptions or delayed timelines for certain large third-party intermediaries, a Hilton spokesperson reiterated that the updated group-commission rate structure applies to all new group business in the U.S. and Canada booked on or after Oct. 1. "Like any company, Hilton has strategic partnerships and agreements with certain organizations, the details of which are confidential," the spokesperson added.

According to Hughes, Hilton felt this was the right time to address the problem of rising distribution costs and attempt to strike a balance. "It's a complicated ecosystem," he noted, and referred to a recent study from Kalibri Labs, titled "U.S. Groups & Meetings: The Economics and Complexity of Intermediation." "There are some interesting findings - there are more acquisition costs that have been creeping in. It's not just the third-party commissions now, there are channel costs, there are housing-bureau fees, there are reservation fees, there are loyalty-planner points and attendee-loyalty points. You've got all these extra acquisition costs, as well as the proportion of business that's going through third parties. It's been growing rapidly, and if the trajectory remains the same, it will soon be 60 percent of the business going into hotels that is intermediated. And all of these things have costs.

"Ultimately, it's a competitive world," Hughes continued. "We need to provide incredible facilities in our hotels to actually attract meeting planners. And that takes investment."

Hughes does not, however, want to discourage independent planners from booking Hilton. "We value the third parties," he said. "They provide a valuable service that's an integral part of the operation, and nothing about what we're doing is trying to decrease the amount of third parties or their business that comes through. We do think the costs need to be rebalanced a little bit. But we absolutely value them, and will continue to extend a hand of friendship and cooperation to the third parties."

Following Marriott's announcement, there has been a good deal of talk about whether the commission model itself is unsustainable and will remain. Hilton's future plans regarding commissions are unclear. "We certainly analyze all the time our distribution strategies and costs and are constantly reevaluating them," explained Hughes. "There's been a lot of thought put into this, and we felt that this is the time to redress the balance of the costs, and this is the appropriate and fair new commission level. How that will change over time, I don't know. We certainly have not planned right now to make any further cuts or changes."

Hughes wants independent planners to know that Hilton has every desire to continue working with them. While Marriott last month canceled a meeting with Meeting Planners Unite founder David Bruce, citing antitrust concerns, Hughes said he wouldn't eliminate out of hand any discussion possibilities if asked. "I can tell you that every request to meet we look at on its own individual merits and see if it's appropriate," he said, "and we'll certainly apply that same openness to any request to meet, from any party. (David Bruce also discussed the matter today with M&C.)

"We respect the place that third-party planners have in the industry," Hughes added. "And we'll continue to do so. We think it's an important range of services. I truly believe the more we can work together to have more great meeting facilities, the more we all truly benefit."

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Diminishing returns: The growing impact of group commissions on profits (Part I)

As an industry, we have dedicated a considerable amount of time discussing and debating the impact of OTAs and in particular, market share and costly commission structures. This stands to reason, as transient business (including corporate and leisure guests) booking through these channels represent the lion’s share of room nights for hotels. However, the issue of intermediaries and costs related to group business is of equal concern, and in some cases represents even higher commissions that continue to increase at a significant pace.

In a recent blog post, Attack of the silent profit killers, I touched on this issue: “Across our big-box hotels (15), we have seen staggering increases in group commissions in 2017, with minimal growth in group rates and ancillary spend, creating a double hit to profitability. To provide a sense for the impact, group commissions for one of the convention hotels in our asset management portfolio increased nearly 27% year-over-year, representing a US$700,000 increase YTD through September. As a percentage of group room sales, this property experienced an increase of more than a point, representing 10% of total group revenue… alarming.”

Today, we have some new data on the subject that further validates my concerns. No other organization has dedicated more time and expertise to highlight the impact of intermediary expenses and develop specific tools to help navigate this new landscape than Kalibri Labs, which recently published a special report entitled U.S. Groups & Meetings: The Economics and Complexity of Intermediation, which speaks to this very issue.  

Highlights from the study:

  • Current group and meetings business in the U.S. approximates US$300 billion;
  • Of which, US$140 billion is spent on rooms;
  • Of which, US$30 billion represents room rental revenue, and the balance spent on F&B, ground transport, audio visual and other ancillary requirements; and,
  • Bringing this down to the property level, groups and meeting represents on average 15% of room nights across all segments, but in the 30% to 35% range for full-service hotels (with ADRs of $220 or more).

The study goes on to share that small meetings, defined as requiring under 100 rooms on the peak night, make up almost three-fourths of the meetings in the U.S. (although only 28% of meetings revenue). Key take away here: smaller meetings, lots of sales effort and unique space requirements needed.

The increasing role of intermediaries in group business is further compounded by the “groups and meetings ecosystem … which entails a complex process from the point at which an event is contemplated through to its execution … many intermediaries involved at various points in the value chain which adds to the process’ fragmentation and ultimately its costs.”

Just how much are these intermediaries costing hotel owners?

  • In 2017, 43% of group business was intermediated (versus booked direct), and is projected to increase to 60% by 2022;
  • Cost of acquisition has risen dramatically over the past five years, paying from 15% to 35% for many pieces of group business, and could conceivably double by 2022;
  • Group booking intermediation is expected to evolve further to include a combination of third-party planners and third-party technology providers, so the rate of intermediation will grow; and,
  • A larger percentage of smaller-sized groups (remember those representing three-quarters of group rooms booked!) will be sold through intermediaries.

What do I think brands/operators should do about it?

  • Major brands should continue to leverage their size and scale to negotiate lower group intermediary commission rates and fees. Marriott International was the first to step up to this challenge, lowering commissions 3 points, effective March 31, 2018. Owners hope that other brands will follow suit.
  • As the Kalibri study suggests, now is the time for the hotel industry to introduce “digital processes that improve work flow and customer experience and consider ways to avoid commoditizing the meeting experience.” Specifically, seek opportunities to increase ease of booking and establishing pathways and methodologies to reduce costs. This sounds like a call for investment in technology to me and it’s the brands that need to step up to make this happen, not only for owners but also to stay relevant themselves.

Read the full article on HOTELS Magazine

Study: Increased Intermediation in the Groups & Meetings Segment

ROCKVILLE, MD—Kalibri Labs has released its latest hotel industry study, which encompasses the groups and meetings market segment. The report highlights that groups and meetings business in the U.S. represents approximately $300 billion, with about $140 billion spent in hotels. Of this $140 billion in hotel spend, about $30 billion represents room revenue, with F&B, ground transportation, AV and other ancillary requirements making up the balance.

The report shows that groups and meetings business is about 15% of total U.S. room nights across the full spectrum of hotel segments. Full-service hotels at the higher end of the rate range (those over $220 published rates) have 30-35% of their room nights generated by groups and meetings business. Small meetings, defined as requiring under 100 rooms on the peak night, make up almost three-fourths of the meetings in the U.S.; however, this represents just over one-fourth of the meetings revenue (28%). The balance of revenue is split between meetings requiring between 100-499 rooms (33%) and those over 500 rooms (39%).

The complexity of the groups and meetings ecosystem is put on display in the report and details the process from the point at which the concept of the event is conceived through to its execution. There are many intermediaries involved at various points in the value chain, which adds to the process’ fragmentation and, ultimately, to its costs. Cost of customer acquisition has risen dramatically over the last five years as the proportion of intermediated events has increased, equating to over $4 billion in 2017 and is expected to reach close to $8 billion to $10 billion by 2022, according to the company. The total costs can reach upwards of 35% of room revenue on many pieces of group business when all third-party commissions and other booking costs are considered.

The report also reveals that automation has entered many aspects of the groups and meetings sourcing, booking and execution process over the last five years and is accelerating, but it hasn’t always made the process more efficient for those involved.

Cindy Estis Green, CEO and co-founder of Kalibri Labs, said, “With this renewed attention, the next two to three years appear to be an inflection point in the way the groups and meetings process will evolve. Operators with hotels of all sizes should pay heed to the costs and processes in place as they are likely to affect all events from the smallest social events to the largest corporate and association meetings. An open and robust dialogue on how to improve the efficiency of this ecosystem would benefit all involved to improve the overall guest experience and reduce costs for all parties.”

Read the full article on Hotel Business

Cost of customer acquisition risen dramatically in groups and meetings market

The total costs can reach upwards of 35% of room revenue on many pieces of group business when all third-party commissions and other booking costs are considered, according to a new report by Kalibri Labs.

Kalibri Labs just announced the release of their latest hotel industry study that encompasses the groups and meetings market segment. This in-depth look at a critical component of the industry’s business mix is the first of its kind and filled with detailed insights and key metrics which reveal increased intermediation in the groups and meetings segment.

The report highlights that groups and meetings business in the U.S. represents approximately $300B, with about $140B spent in hotels. Of this $140B in hotel spend, about $30B represents room revenue, with F&B, ground transportation, AV and other ancillary requirements making up the balance.

The report shows that groups and meetings business is about 15% of total U.S. room nights across the full spectrum of hotel segments. Full service hotels at the higher end of the rate range (those over $220 published rates) have 30-35% of their room nights generated by groups and meetings business. Small meetings, defined as requiring under 100 rooms on the peak night, make up almost three-fourths of the meetings in the U.S., however this represents just over one-fourth of the meetings revenue (28%). The balance of revenue is split between meetings requiring between 100-499 rooms (33%) and those over 500 rooms (39%).

The complexity of the groups & meetings ecosystem is put on display in the report and details the process from the point at which the concept of the event is conceived through to its execution. There are many intermediaries involved at various points in the value chain which adds to the process’ fragmentation and ultimately to its costs. Cost of customer acquisition has risen dramatically over the last 5 years as the proportion of intermediated events has increased, equating to over $4B in 2017 and is expected to reach close to $8-10B by 2022. The total costs can reach upwards of 35% of room revenue on many pieces of group business when all third-party commissions and other booking costs are considered.

The report also reveals that automation has entered many aspects of the groups & meetings sourcing, booking and execution process over the last five years and is accelerating but it hasn’t always made the process more efficient for those involved. Cindy Estis Green, CEO and Co-founder of Kalibri Labs, says that, “with this renewed attention, the next 2 to 3 years appear to be an inflection point in the way the groups & meetings process will evolve. Operators with hotels of all sizes should pay heed to the costs and processes in place as they are likely to affect all events from the smallest social events to the largest corporate and association meetings. An open and robust dialogue on how to improve the efficiency of this ecosystem would benefit all involved to improve the overall guest experience and reduce costs for all parties.”


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Kalibri Labs Report Reveals Increased Intermediation in the Groups and Meetings Segment

A new Kalibri Labs report reveals increased intermediation in the groups and meetings segment of the hotel industry, the associated costs, and future projections. The analysis sheds light on the challenges imposed by a fragmented ecosystem with a focus on costs and the impact on relationships between hotels and their customers.

Groups and meetings business in the United States totaled approximately $300 billion in spending last, with about $140 billion spent in hotels. Of this hotel spend, about $30 billion represents room revenue, with F&B, ground transportation, AV, and other ancillary requirements making up the balance.

The report shows that groups and meetings business is about 15 percent of total U.S. room nights across the full spectrum of hotel segments. Full service hotels at the higher end of the rate range—those over a published rate of $220—have 30 to 35 percent of their room nights generated by groups and meetings business. Small meetings—those under 100 rooms on the peak night—make up almost three-fourths of the meetings in the U.S., however this represents just over one-fourth of the meetings revenue (28 percent). The balance of revenue is split between meetings requiring between 100 and 499 rooms (33 percent) and those over 500 rooms (39 percent).

Rising Customer Acquisition Costs

The report also details the meetings and events process—from when the event is conceived through its execution. The many intermediaries involved at various points adds to the process’ fragmentation and, ultimately, to its costs. Cost of customer acquisition has risen dramatically over the last five years as the proportion of intermediated events has increased, equating to over $4 billion in 2017. Customer acquisition costs are expected to reach close to $8 to 10 billion by 2022. The total costs can reach upwards of 35 percent of room revenue on many pieces of group business when all third-party commissions and other booking costs are considered.

Automation in Groups and Meetings

Automation has entered the sourcing, booking, and execution processes for groups and meetings over the last five years. However, it hasn’t always made the process more efficient for those involved. “With this renewed attention, the next two to three years appear to be an inflection point in the way the groups and meetings process will evolve,” Cindy Estis Green, CEO and co-founder of Kalibri Labs, says. “Operators with hotels of all sizes should pay heed to the costs and processes in place as they are likely to affect all events from the smallest social events to the largest corporate and association meetings. An open and robust dialogue on how to improve the efficiency of this ecosystem would benefit all involved to improve the overall guest experience and reduce costs for all parties.”

Read the full article on Lodging Magazine

Report: Intermediaries Contribute to Meetings Costs & It Will Only Get Worse

By: Julie Sickel

The cost to hotels for groups and meetings has been on the rise in the U.S. in recent years. According to a report from hotel benchmarking company Kalibri Labs, the cost, if left unchecked, likely will double by 2022.

The report, titled U.S. Groups & Meetings: The Economics and Complexity of Intermediation, estimates that groups and meetings cost the U.S. hotel industry $3.4 billion to $4 billion in 2017. Commissions paid to intermediaries accounted for $1.3 billion of that, based on a 10 percent commission rate. By 2022, the cost could reach $8 billion or $10 billion, according to projections from Kalibri Labs, PwC and Oliver Wyman.

Kalibri serendipitously released some early findings from its research in January, just before Marriott International announced its intention to cut groups and meetings commissions in the U.S and Canada from 10 percent to 7 percent by March 31. But even with the largest hotel company in the world pledging to lower the money it pays out to intermediaries, Kalibri co-founder and CEO Cindy Estis Green said that, at the rate intermediation is growing, Marriott's move isn't enough to alter future projections.

The Solutions & Tech Problem

The ways in which organizations book groups and meetings with hotels is largely unchanged from where it was 40 years ago, according to the report. What has changed is the number of vendors who provide services and solve for pain points in a stagnant process. Typically, they exist in the first four stages of the meetings process: discovery, sourcing and booking, planning, and execution.

Of the approximately 100,000 meeting planners in the U.S., according to PwC's estimates, 20 percent are external planners who aren't directly employed by the organizations they assist. One-third of those external planners are employed by one of six major firms: HelmsBriscoe, ConferenceDirect, American Express Meetings & Events, Experient, Maritz Travel and BCD Meetings & Events.

Tech companies also have emerged to assist with discovery, sourcing, planning, and execution, including Cvent, Etouches, Groupize, Groups360 and Cendyn. While certain steps of the process are now being supported, Estis Green said, the solutions provided by third parties are still contributing to a broken system. For example, while automation can solve for the RFP process on the meeting host side, it increases the labor costs for hotels, which get inundated with high volumes of queries. "The groups and meetings market is very diverse," Estis Green said. "There are a lot of tech companies that are interested in aggregating it, the way transient business has aggregated over the last 15 years, and it's more complicated than the transient business. There's more to it. The process is more complex."

Approximately 43% of group rooms revenue is being intermediated. By 2022, Kalibri estimates, that portion will grow to 60 percent.

The Threat of Commoditization

Beyond the dollars and cents impact of increased intermediation, Estis Green warned, "If hotels become a commodity for the groups and meeting experience, the quality of the experience will deteriorate." It becomes less about finding a unique and engaging space and more about finding "a box."

"For hotels to be sharp and tuned in to what their customers want, they need to know their customers really well," Estis Green said, which is harder the more intermediaries step in between the two sides.

She hopes the report will help the industry recognize the need to change the meetings ecosystem. "In order to make it more efficient," she said, "all of the players in the food chain may have to give a little to make it work better."

Read the full article on Business Travel News

Expedia turns to HomeAway as direct-booking campaigns dent earnings

Expedia’s Q4 earnings missed projections as its stranglehold on the online hotel bookings landscape may be in jeopardy over the effectiveness of hotel direct-booking campaigns, though Expedia CEO Mark Okerstrom is reluctant to admit as much. 

Expedia reported $10.05 billion in revenue for the 2017 fiscal year, missing analyst projections of $10.11 billion. Expedia’s bookings increased 14 percent, or $2.4 billion, reaching $19.8 billion, but the company missed its forecasted revenue goal of $2.36 billion, recording $2.32 billion.

 Expedia missed its quarterly projections once again, but this time it may have more to do with spending than the weather. 

Expedia missed its quarterly projections once again, but this time it may have more to do with spending than the weather. 

Directly Limiting

Hotel companies' push for direct bookings may have had its initial detractors, but a 2017 report from Kalibri Labs, which analyzed the early days of the campaign, showed room night growth from May through Dec. 2016 was up 7.8 percent across 12,000 surveyed hotels, while net revenue for these properties also rose 9.3 percent. 

This data are not the only relevant facts to consider when looking at the impact of direct bookings. During Expedia's Q4 call, Okerstrom said the company's sort order for online searches is pushing bookings toward independent hotels. This could be attributed to Expedia's customers preferring to book by price. If independent hotels are appearing higher on Expedia’s searches, then it stands to reason that the better rates for branded hotels will be found through branded booking channels.

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